To report a 401k rollover on your tax return, you use two forms: the 1099-R from your old plan and Lines 5a and 5b on Form 1040. Put the gross distribution from Box 1 of the 1099-R on Line 5a, put the taxable amount on Line 5b (zero if you rolled the whole thing over), and write “Rollover” next to Line 5b so the IRS knows why the taxable figure is zero. Done correctly, the rollover adds no tax. The details below change depending on whether the money moved directly between institutions or passed through your hands first.
Lines 5a and 5b on Form 1040
Retirement plan distributions belong on Lines 5a and 5b of the 2025 Form 1040. Line 5a is the gross distribution, taken straight from Box 1 of your 1099-R. That tells the IRS how much money left your old account. Line 5b is the taxable portion. For a complete rollover, that number is zero.
The word “Rollover” written next to Line 5b is what keeps the return clean. Without it, the IRS sees a distribution on Line 5a and a zero on Line 5b and has no explanation for the gap. With it, the return matches what the plan administrator already reported.
If your old plan withheld 20% for federal taxes (which happens on indirect rollovers), the amount in Box 4 of the 1099-R goes on the federal income tax withheld line in the payments section of Form 1040. That is how you claim credit for taxes already paid. Skip this step and you lose the withholding credit, which can flip a refund into a balance due.
Reading Your 1099-R
Your old plan administrator sends Form 1099-R by early February of the year after the rollover. For the 2025 tax year, the deadline is February 2, 2026. The IRS gets its copy at the same time, so your numbers have to match.
Four boxes drive the reporting:
- Box 1 is the gross distribution, the number that lands on Line 5a.
- Box 2a is the taxable amount. For a complete direct rollover, it should read zero. Any figure here means part of the distribution didn’t qualify.
- Box 4 is federal income tax withheld. On an indirect rollover this is typically 20% of Box 1.
- Box 7 is the distribution code. Code G means the administrator sent the funds directly to another qualified plan or IRA. Codes 1 (early distribution) or 7 (normal distribution) mean the money was paid to you, which is what you’ll see on an indirect rollover.
A Code G makes the reporting almost automatic. Codes 1 or 7 mean you need to show the IRS on your own return that the rollover was completed within the 60-day window.
Direct Rollovers
In a direct rollover, the old plan sends the money straight to the new custodian by check or wire, and nothing is withheld. Box 2a shows zero, Box 7 shows Code G, and the reporting is straightforward: Line 5a gets the gross amount, Line 5b gets zero, “Rollover” goes in the margin, and there is no withholding to reconcile.
Indirect Rollovers
An indirect rollover puts the check in your hands first. The plan is required to withhold 20% for federal taxes before sending it, so a $50,000 balance arrives as a $40,000 check. To complete the rollover in full, you have to deposit the entire $50,000 into an IRA or another employer plan within 60 days, which means covering the missing $10,000 from your own funds. Whatever you don’t replace becomes a taxable distribution.
The 60-day clock starts the day you receive the check. Miss it by a day and the entire distribution becomes taxable income for the year, plus a 10% additional tax if you’re under 59½.
On the return, Line 5a still shows the full Box 1 amount. If you deposited every dollar within 60 days (including replacing the withholding), Line 5b is zero and you write “Rollover” next to it. The 20% from Box 4 goes on the withheld-tax line in the payments section, where it either reduces your balance due or increases your refund.
Partial Rollovers
If you rolled over only part of the distribution, the unreplaced amount is taxable. Gross distribution of $50,000, withholding of $10,000, deposit of the $40,000 you received: Line 5a shows $50,000, Line 5b shows $10,000, and you still write “Rollover” next to Line 5b. The IRS now sees $10,000 as taxable. If you’re under 59½, that $10,000 is also exposed to the 10% early withdrawal penalty unless an exception applies.
Roth 401k Rollovers
Rolling a designated Roth 401k into a Roth IRA follows a different path. Because Roth contributions were made with after-tax dollars, the rollover itself generally isn’t taxable, but you need to track basis (original contributions versus earnings) on Form 8606, Nondeductible IRAs. The amount rolled in from a designated Roth account is added to Line 22 of Form 8606 as investment in the contract.
One detail that catches people out: the five-year aging period on your Roth 401k does not carry over to the Roth IRA. The clock for qualified tax-free distributions from the Roth IRA starts from the year of your first Roth IRA contribution. If you’ve never had a Roth IRA before, rolling a six-year-old Roth 401k into a new Roth IRA still means waiting five more years before earnings come out tax-free.
Form 5498 From the Receiving Account
After the rollover deposit lands, the receiving IRA custodian reports it to you and the IRS on Form 5498. Box 2 shows rollover contributions received during the year. The form usually arrives by June 1 of the year after the rollover, so it won’t be in hand when you file. You don’t need it to file, but keep it. It is independent confirmation that the money landed where you said it did, which is exactly what you want if the IRS ever asks.
When the 1099-R Is Wrong
Plan administrators sometimes issue a 1099-R with the wrong distribution code, and the IRS computer matches your return against the code on file. If the plan reports Code 1 when it should have reported Code G, the IRS may automatically propose additional tax.
Contact the old plan administrator as soon as you spot the error. They are required to issue a corrected 1099-R. Don’t file with numbers you know are wrong just to meet the deadline; if the correction is slow, an extension is better than creating a mismatch. If you’ve already filed, you may need to amend once the corrected form arrives.
What to Keep
The IRS recommends keeping tax records for at least three years from the filing date, which matches the general statute of limitations for assessing additional tax. That window stretches to six years if more than 25% of gross income is omitted from the return, which is where an unreported failed rollover could land you.
For a rollover specifically, keep the Form 1040, every 1099-R, the Form 5498 from the receiving institution, and bank or account statements showing the deposit. For an indirect rollover, hold onto evidence of the deposit date to prove you met the 60-day deadline. For a Roth 401k rollover, retain Form 8606 indefinitely, because you’ll need the basis figures years later when distributions from the Roth IRA begin.